Are Trailers Covered Under Commercial Auto Insurance?

Trailers are essential for transporting food items, vehicles, livestock, and many other products. Now while transporting these products, the trailer may get damaged. Or it can also get damaged due to an accident even while it’s parked.

What’s even more concerning is, if the trailer gets damaged, the products that you’re transporting can get damaged too. Ultimately, you’re at risk of incurring loss to compensate the damage for the trailer, and the products as well. This can lead to substantial financial risk for your business.

Does Commercial Auto Insurance Cover Trailers?

If you’re considering to either purchase or renew your commercial auto insurance, you might be wondering whether it covers trailers? The good news is yes commercial auto insurance does cover trailers but most of these policies cover trailers which are typically less than 2,000 pounds.

If your trailer weighs more than 2,000 pounds, then you can opt for add-on commercial auto insurance coverages for heavier trailers. Although it can be more costly to purchase specialized add-on insurance coverages for trailers that weigh more than 2,000 pounds, it can help you avoid financial damage that costs way more.

Just think about it, if your trailer gets damaged with goods worth hundreds or thousands of dollars, it can heavily damage your business financially. Plus, it can also affect your business’s reputation negatively.

So, if it’s necessary you should consider purchasing add-on commercial auto insurance coverages that can protect your trailer, and it contains. Here’s a detailed step by step guide on how to get commercial auto insurance for trailers.

Types of Commercial Auto Insurance Coverages for Trailers

While you’re exploring options for commercial auto insurance, it is essential learn the types of auto commercial auto insurance that covers trailers. Typically, commercial auto insurance policies have a multitude of options to choose from, it can often get confusing to pick the right commercial auto insurance coverages for your trailers.

Here something to note, although a trailer is attached to a truck, the trailer itself is regarded as a separate vehicle. So, you will have to specifically acquire commercial auto insurance coverages for your trailers.

If you’re looking for a reliable auto insurance agency in Michigan providing essential trailers insurance, please consider checking our diverse commercial auto insurance solutions online, or visit our office in Flint MI, Saginaw MI and Mt Pleasant MI.

Here’s a detailed breakdown of the 3 main essential commercial auto insurance coverages that you should consider purchasing.

Commercial Auto Liability Insurance

Just like auto liability insurance, commercial auto liability insurance is also mandatory in 49 out 50 states in the US with New Hampshire being the only exception.

Commercial liability auto insurance covers the medical expenses, and any repair or replacement costs of the other driver, their passengers, pedestrians or anyone else harmed by an accident caused by someone from your organization. It even covers the expense to deal with a lawsuit, incase if you get sued after an accident.

You need to get commercial auto insurance coverage of at least $500,000, although insurance experts recommend up to $1 million.

Collision Auto Insurance

Collision auto insurance is very essential for trailers used to transport your products or any other commercial activity. While commercial auto insurance does not cover the products inside the trailer, it covers repair and replacement costs of the trailer after an accidental collision with another object, or vehicle regardless of whoever is at-fault.

So, whether you own the trailer, or it’s rented, you can seamlessly cover hefty repair or even replacement costs minus your deductibles and its depreciation cost.

Comprehensive Auto Insurance

Comprehensive auto insurance is crucial for trailers as it’s susceptible to theft, vandalism, and other accidental damages that are beyond your control such as a fire hazard, and natural disasters like severe storms, flood or an earthquake.

With the comprehensive auto insurance, your insurer will pay you the repair or replacement cost of your trailer based on its actual cash value (current market value). The current market value is determined by deducting your trailer’s depreciation cost.

So, after you pay you deductibles, your comprehensive auto insurance will compensate your trailer’s repair, and replacement costs up to its coverage limits. However, just like collision auto insurance, it does not cover the products inside the trailer.

Additional Commercial Auto Insurance Policies for Trailers

If you want to get enhanced financial protection, it is essential to explore different commercial auto insurance coverages for your trailers. There are many situations, and incidents in which you will need auto insurance coverages that are more suitable for trailers.

So, based on your requirements here are some additional commercial auto insurance coverages for trailers that you should consider.

Trailer Interchange Insurance

Trailer interchange insurance is designed to cover trailers that you don’t own. These are the ones that you rent and use interchangeably from the rental company. As you will get a different trailer periodically, it is not possible to register a specific trailer.

So, the trailer interchange insurance covers the repair, and replacement costs for any accidental damage which could be due to any accidental collision or damages that are beyond your control, typically the ones covered by comprehensive auto insurance.

The difference is collision and comprehensive auto insurance covers trailers that are registered under your ownership, the trailer interchange insurance covers trailers that you don’t own.

Utility Trailer Insurance

The utility trailer insurance is a specialized insurance policy specifically to cover utility trailers. The utility trailer insurance policy includes coverages such as:

• Auto Liability Insurance
• Collision Auto Insurance
• Comprehensive Auto Insurance

If your business owns utility trailers, then you should consider purchasing the utility trailer insurance policy for optimal financial protection. It does not cover utility trailers that you have rented, just the ones owned by your business.

Cargo Trailer Insurance

Cargo trailer insurance is another commercial auto insurance policy specifically designed to financially protect your business’s cargo trailers. The cargo trailer insurance covers:

• Liability compensations: If you’re involved in an accidental crash with the cargo trailer in which you’re at-fault then insurer will bear the liability compensation to the other driver or any other third party harmed by the accident.
• Damage to the Trailer: It covers repair and replacement expenses whether the trailer has been damaged in an accidental collision or an unforeseen event.
• Damage to the Cargo: It covers the products that have been damaged in the accident. So, this policy provides enhanced financial protect as it covers both the trailer, and whatever you’re hauling in it.
• Theft or Vandalism: If your cargo trailer gets stolen then your insurer will pay its actual cash value as a compensation for its replacement expense. If it gets vandalized, then your insurance will pay the repair or replacement cost up to your coverage limit.

Earned Freight Coverage

Whenever you're transporting your products in a trailer, there’s always a risk of accidental damage, or any unforeseen event that can damage the products and incur hefty loss for your business. The earned freight coverage is specifically designed to financially protect the products that’s being distributed from one location to another.

Why is it Crucial to Financially Protect Your Trailers with Commercial Auto Insurance?

Whether you own the trailers, or you’ve rented them for business use, an accident can damage to the trailers to the point it’s either expensive to repair or needs replacement. In this case, if your trailers aren’t covered by any commercial auto insurance policy, then you will have to fund these expensive or replacement costs from your business’s capital.

This can lead to a severe loss for your business. It’s even riskier if the trailers are rented. If you can’t compensate the damages, then the rental company may file a lawsuit against your business which can lead to hefty fines, and other legal consequences.

On top of that, you will also have to finance a lawyer to deal with the court proceedings which can cost your business a significant amount. Either way, if your trailers aren’t financially protected with commercial auto insurance policies and adequate coverage, it can incur high costs which can be financially straining for your business.

So, to avoid such financial hurdles, and to prevent your business’s capital from bleeding out, it is crucial for you to ensure that your trailers are covered with commercial auto insurance.

The Bottom Line 

When it comes to purchasing commercial auto insurance for your trailer there are multiple policies and coverages to choose from. So, before making any purchase decision, you should thoroughly evaluate your trailer’s insurance requirements.

Based on that you should determine which commercial auto insurance coverages are best fit for your business. Remember, it’s crucial to ensure adequate financial protection. If you’re using trailers to distribute products, it’s highly recommended that you consider coverage options that cover the trailers and the content in it.

Additionally, if you need expert advice or if you’re interested to purchase commercial auto insurance, please contact us to get a free quote and consultation.

FAQs

Does commercial auto insurance cover trailers?

Yes, commercial auto insurance does cover trailers, but you will get partial coverage in most of the coverages. So, that’s why you either need to combine multiple commercial auto insurance coverages in your policy or get standalone insurance policies for trailers such as utility trailer insurance, and cargo trailer insurance.

What type of insurance do I need for a trailer I don’t own?

If you’re using a trailer under interchangeable agreement that you don’t own and have rented, then you will need to get trailer interchangeable insurance. This coverage protects you against damage to the trailer while it’s in your care, including collision, theft, vandalism, and other covered incidents.

Do I need separate insurance for a cargo trailer?

It’s best to get separate insurance for a cargo trailer i.e. the cargo trailer insurance which covers both the trailer and the content in it. So, if your trailer gets damaged in an accidental crash or unforeseen event, your cargo trailer insurance will cover the repair/replacement costs of the trailer, and the products in it.

What happens if my trailer is stolen?

If your trailer is stolen, Comprehensive Insurance will typically cover the loss, but only if you have it included in your policy. If you’re hauling cargo, Cargo Insurance may be needed to cover the value of lost goods.